TEAMSTERS PACT COULD BRING RATE INCREASES

TEAMSTERS PACT COULD BRING RATE INCREASES

Higher-than-expected costs in the trucking industry's new Teamsters labor contract could lead to another round of freight rate increases, some industry officials warned.

Analysts and trucking executives confirmed this week that the industry's new three-year labor pact will hit hardest those companies that have added the most employees since 1985.Truckers, apparently confident that the new pact would contain only modest labor increases, recently accepted rate hikes averaging about 4 percent.

Some officials now say privately that the increase, which took effect April 1, probably will not cover the higher wage expense for some of the more prosperous carriers.

I don't see too many positives for us, said a top official for a large regional carrier. I don't think, as management, we convinced the union of the harsh competitive situation. It's a tough contract.

The new agreement calls for a 50-cent hourly wage increase in the contract's first year. A cost-of-living adjustment, which may not exceed 35 cents an hour, will take effect in both the second and third years.

Most damaging to the fast-growing carriers, however, is a significant adjustment in the new-hire wage program implemented in the 1985 agreement.

Under that plan, newly hired employees received 70 percent of the standard wage their first year, rising to 80 percent in the second year and 90 percent in the third before reaching the top rate.

The new agreement creates an 85 percent, 90 percent, 95 percent scale that is reached in just 18 months instead of three years. As a result, thousands of employees hired over the last three years immediately will receive wage increases of 10 percent to 30 percent.

The 50-cents-an-hour increase represents about a 3.5 percent wage hike, but the changes in the new-hire formula actually will hike labor costs 6 percent to 8 percent for many companies.

That could force many companies, including some of the nation's biggest carriers, to raise their rates to recoup the higher costs.

Other provisions in the new pact call for a 20-cents-an-hour hike in health and welfare and pension payments in each of the contract's three years; a freeze in the current $12 an hour pay rate for casual, or part-time, workers; and a profit-sharing option for carriers.

Under the profit-sharing plan, a company may ask its employees to sacrifice up to 15 percent of their wages in exchange for a share of future profits. But 75 percent of the company's employees must approve the plan.

If a profit-sharing program is accepted, it becomes mandatory for all company employees.

Sources close to the talks say the contract also contains new language that makes its tougher for carriers to use owner-operator truck drivers and railroads to replace line-haul union trucking operations.

But one official said the changes are not that much stronger. There were no language changes pertaining to so-called double-breasted operations, where a company operates both union and non-union subsidiaries.

Some union members complained that carriers with dual operations have been diverting business to the non-union subsidiary and had been seeking more restrictive language to block the practice.

Management also had been seeking some work rule changes that would have granted more flexibility in using union employees. But officials said there were no significant changes in the national agreement applying to the use of casuals or road drivers.